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Some background for those who may not be familiar with escrow services: Taxes and financial obligations are simplified if a company only holds their own money.
by learningmore 10y ago
Some background for those who may not be familiar with escrow services:
Taxes and financial obligations are simplified if a company only holds their own money.
Simple example:
A consignment store owns no products and allows people to offer their items for sale. They charge 20% of the sale price.
Option 1: The store accepts the customer's payment of $100, then gives the product owner $80.
Pro: simple
Con: the store needs to prove how the money was handled and also prove it was given to the seller.
Option 2 with escrow:
Customer pays Stripe/escrow service. The escrow service splits the payment and gives 20% to the store and 80% to the customer.
Con: more complicated.
Pro: the store does not need to disclose the money they did not touch on their taxes (correct?) and liability is decreased because they never held the seller's money.
Stripe Connect [1] offers this (not the standard Stripe account). In my research, PayPal was integrated into more services (I was interested in integrating with WooCommerce), had been around longer and offered several options under their adaptive payments option. PayPal requires a pre-approval process, and talking to a WooCommerce developer, they noted that companies who are very new may have trouble getting approved.
WePay was another option I looked into, and they noted an approval in "minutes", but their API seemed to be very manual and did not integrate with WooCommerce for escrow/ marketplace payments.
[1]https://stripe.com/connect https://stripe.com/connect